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Focused strategy for maximum benefit

Finland's innovation policy proved extremely successful in the 1990s, providing a strong basis for the country's economic growth. With the emergence of new challenges ?globalisation and shifting demographics ?a re-orientation of policy has become necessary. These issues have been addressed in the new focused strategy for 2005-2007 developed by Sitra, the Finnish National Fund for Research and Development.
Sitra, the Finnish Innovation Fund

Finland's technology-centred innovation policy was formulated in the early 1980s, and it helped the country become a world leader in information and communication technology (ICT). The ground has now shifted, however, and there are new challenges to face.

The urgent need for a proactive response is underlined by the examples of Japan and Germany. Ranked by the World Economic Forum as the world's most competitive nations in the early 1990s, both countries have since fallen behind, due to their inability to react to rapid changes in the global economy.

Key role for innovations

Investments in research and development alone are not enough to secure Finland's long-term economic growth and competitive edge. In addition to technological innovations, social, organisational, and methodological innovations incorporating and promoting the use of high technology are also needed.

A key issue here is how to respond to the challenge of the ageing of the population. Policies are needed to bolster the continued dynamic input of younger people and to concentrate on innovations that ensure the ageing workforce is able to meet the requirements of global competition. Many OECD countries face similar demographic changes, but Finland will be among the first to experience them.

Sitra's response to these challenges is contained in its new focus strategy for 2005- 2007. By concentrating on the technological, social, and institutional aspects of innovation, the aim is to combine a range of actors, and factor in new forms of cooperation, networking, partnership, and venture capital operations.

Sitra, the Finnish National Fund for Research and Development, is an independent public foundation under the supervision of the Finnish Parliament, with a mandate to promote the economic prosperity of the Finnish people.

Sitra programmes

Sitra aims to boost its own operational efficiency by centring its strategy around a number of programmes. All the organisation's tools ?research, development, testing, piloting, implementation, and venture capital activities ?will be devoted to specific programmes.

The first programmes will deal with the next-generation innovation system, reform of the health care system, and business opportunities in Russia and India.

The aim of the programme on the nextgeneration innovation system is to build on the excellent system that already exists in this area. Finland has a good track record of cooperation in technological development between universities, research institutions, and businesses, but in other areas ?such as economics and social sciences ?this type of innovative collaboration needs strengthening.

The concentration on health care system reform is closely linked to the challenges associated with the future of the health service as the ageing of the population increases. The present model faces an impending crisis because public and private resources will be insufficient to cover future demand. Productivity and efficiency need to be improved, therefore. One solution is to apply new technology to the reform of the health sector. Sitra will be able to draw on its existing experience in the sector in furthering this programme.

The programme on business opportunities in Russia aims to enhance Finland's interface with Russia, in line with Finnish and EU interests. Finland has a good trade infrastructure with Russia, and has crucial export markets there. Work needs to be done, however, in integrating efforts and improving collaboration with research institutions, the authorities, and public and private sectors. Sitra has the potential to act as a valuable coordinator for new types of operations in Russia.

Recognising risks

Sitra's focused strategy entails a certain amount of risk. It may turn out that the goals of a particular programme cannot be achieved, or that the partnerships required or projects pursued turn out to be inefficient.

To help guard against this, the programmes have been subjected to stringent selection criteria. Sitra is also able to respond flexibly and swiftly to changing circumstances, and will be able to shift attention and resources when needed, as each programme will be closely monitored.

Refocusing venture capital

The second pillar of Sitra's new strategy is a new role for its venture capital operations. Instead of being a general venture capital investor, Sitra intends shifting its focus more towards the pre-seed and seed phases. The aim is to take greater responsibility, with a view to optimising efficiency and returns.

This will require developing and experimenting with new funding models and adapting them to public and private sector operations. Growth phase investments will be limited. Other actors are present here, and Sitra's investments should go to companies and partners that provide inputs for its programmes.

Strategic partners

Revamping Sitra's operational models underpins Sitra's new strategy. New national and international partnerships will have to be created to achieve the goals of the new strategy. Cooperation will need to be matched increasingly by partnerships involving a division of labour and commitment to common goals.

The goals of Sitra's new strategy have been honed for maximum impact, and are designed to provide Sitra with new flexibility, while setting a course that will promote a new phase of sustained growth for Finland.

> Esko Aho
(Published in High Technology Finland )